LAKSHMI SARASWATHI TEXTILES (AMI) LTD, CHENNAI V. DCIT, CORP CIR-6(2), CHENNAI

ITA 3384/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3240 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 11-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VIJAYA PRABHA
• Assessee Lawyers: M PALANIVEL
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , ! ' # , $ %& BEFORE SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBE R ./ ITA NO.3384/CHNY/2018 ' ( )( /ASSESSMENT YEAR: 2010-11 M/S. SRI LAKSHMI SARASWATHI TEXTILES (ARNI) LTD., NEW # 16, OLD # 17, KRISHNAMA ROAD, NUNGAMBAKKAM, CHENNAI 600 034. VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-6(2), CHENNAI. [PAN : AABCS 2312M ] ( *+ /APPELLANT) ( ,-*+ /RESPONDENT) *+ . / / APPELLANT BY : SHRI M. PALANIVEL, ADVOCATE ,-*+ . / /RESPONDENT BY : MRS. VIJAYAPRABHA, JCIT 0 . 1$ /DATE OF HEARING : 25.02.2020 23) . 1$ / DATE OF PRONOUNCEMENT : 28.02.2020 %# / O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER : THIS APPEAL OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI VI DE PROCEEDINGS IN ITA NO. 415/CIT(A)-16/2010-11, DATED 24.09.2018 AGAINST THE ORDER PASSED BY THE ITO, COMPANY WARD-V I(1), CHENNAI (AO) U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREI NAFTER THE ACT) DATED 01.03.2013 FOR THE ASSESSMENT YEAR (A.Y) 2010 -11. ITA NO.3384/CHNY/2018 (A.Y 2010-11) M/S.SRI LAKSHMI SARASWATHI TEXTILES (ARNI) LTD. :- 2 -: 2. THE ONLY EFFECTIVE GROUND TO BE DECIDED AS TO WHETH ER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE U/S. 40(A)(I) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON CO MMISSION PAID TO FOREIGN AGENTS IN RESPECT OF SERVICES RENDERED BY T HEM OUTSIDE INDIA AND IN VIEW OF THE FACT THAT THE SAID AGENTS DOES N OT HAVE ANY PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY MANUFACTURING COTTON YARN. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PAID A SUM OF RS. 1,60, 863/- TOWARDS COMMISSION TO ITS FOREIGN AGENTS IN RESPECT OF SERV ICES RENDERED BY THEM OUTSIDE INDIA WITHOUT DEDUCTION OF TAX AT SOUR CE. WE FIND THAT THE UNDISPUTED FACT HEREIN IS THAT THE FOREIGN AGENTS H AD RENDERED THE SERVICES TO THE ASSESSEE OUTSIDE INDIA. ACCORDINGLY , WE HOLD THAT THE AMOUNT PAID TO THEM BY THE ASSESSEE DOES NOT FALL W ITHIN THE AMBIT OF INCOME CHARGEABLE TO TAX IN INDIA IN TERMS OF S. 19 5(1) OF THE ACT. WHEN THE COMMISSION PAID TO THEM IS NOT CHARGEABLE TO TAX IN INDIA, THERE IS NO QUESTION OF DEDUCTION OF TAX AT SOURCE AND CONSEQUENTIAL DISALLOWANCE U/S. 40(A)(I) OF THE ACT IN THE HANDS OF THE ASSESSEE. WE FIND THAT THIS ISSUE WAS ALSO SUBJECT MATTER OF ADJ UDICATION BY THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.999 & 10 00/MDS/2011 FOR ITA NO.3384/CHNY/2018 (A.Y 2010-11) M/S.SRI LAKSHMI SARASWATHI TEXTILES (ARNI) LTD. :- 3 -: A.Y 2006-07 AND 2007-08 DATED 23.03.2012, WHEREIN T HIS TRIBUNAL BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GE INDIA PRIVATE TECHNOLOGY CENTRE VS. CIT REPOR TED IN 327 ITR 456 (SC); CBDT CIRCULAR NO.786 DATED 07.02.2000 AND SPECIAL BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF ITO VS. PRASAD PRODUCTIONS LTD. 125 ITD 263 HAD HELD THAT THE PAYM ENTS MADE TO FOREIGN AGENTS WOULD NOT BE LIABLE FOR DEDUCTION TA X AT SOURCE AND CONSEQUENTLY NO DISALLOWANCE U/S. 40(A)(I) OF THE ACT COULD BE MADE IN THE HANDS OF THE ASSESSEE PAYER. 4. IN THE ABOVE SAID OBSERVATIONS AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENT RELIED UPON HEARING ABOVE, WE DI RECT THE LD. AO TO DELETE THE DISALLOWANCE U/S. 40(A)(I) OF THE ACT IN RESPECT OF COMMISSION PAYMENTS MADE TO NON-RESIDENT FOREIGN AG ENTS. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON 28 TH DAY OF FEBRUARY, 2020 IN CHENNAI. SD/ - SD/ - ( ) (MAHAVIR SINGH) /VICE PRESIDENT ( ) (M. BALAGANESH) /ACCOUNTANT MEMBER /CHENNAI, 4% /DATED: 28 TH FEBRUARY, 2020 . EDN, SR. P.S ITA NO.3384/CHNY/2018 (A.Y 2010-11) M/S.SRI LAKSHMI SARASWATHI TEXTILES (ARNI) LTD. :- 4 -: %# . ,'15 65)1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 71 ( )/CIT(A) 4. 0 71 /CIT 5. 58' ,'1' /DR 6. '9( : /GF